Positive CSCO references in ASND "slam" report....
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Friday September 12 5:31 AM EDT
Ascend Shares Continue to Slide
By Kourosh Karimkhany
PALO ALTO, Calif. (Reuter) - Stock of Ascend Communications Inc. opens lower again Friday after sliding Thursday on concerns the computer networking company's earnings will be hurt by falling prices, weak European sales and competitive new products.
Ascend fell $2.19 to $37.81 on Nasdaq, where it was the most active issue on volume of 27.7 million shares. The stock has fallen 12 percent in two days.
At least four Wall Street analysts downgraded Ascend's stock or owered their earnings forecast for the quarter, citing lower-than-expected sales in Europe and price cuts on some of its equipment.
On top of that, Ascend faces competition from its biggest rival Cisco systems Inc., which will introduce products shortly that could steal some of its potential customers, analysts said.
"They will miss the quarter obviously," said Peter Swartz, networking analyst at investment bank Salomon Brothers Inc. "In the longer-term perspective, these guys haven't been able to deliver a bullet-proof platform. Big customers ain't happy with their products."
Ascend, based in Alameda, Calif., makes equipment that ties computers in the far-flung branches of big companies into a single network. It also makes gear for Internet service providers and online services -- devices that can accept hundreds of calls from the modems of personal computer users dialing in to connect to the Internet.
Swartz said some of Ascend's bigger customers are waiting longer to place big orders, which is making Ascend's stream of revenue more "lumpy."
And Cisco, the world's biggest networking vendor, within a month would introduce a new concentrator that would be "quite attractive" to Ascend customers, said Farrokh Billimoria at investment bank Hambrecht & Quist.
Ascend executives could not be reached immediately for comment.
Another Hambrecht & Quist analyst Joe Noel cut Ascend earnings estimates to 34 cents a share on revenue of $324.5 million from 36 cents a share on revenue of $336.6 million.
In August, Ascend disclosed in a financial document that sales in July were far less than it had expected. Since then, the stock has been slipping on concerns that the company would not meet Wall Street expectations this quarter. |
